Principles of Management Lecture 2 - Management Models

Analysis of workflows with the main focus of improving economic efficiency, especially labour productivity.

Job Specialization and the Division of Labor: Process by which a division of labor occurs as different workers specialize in different tasks over time

18th-century economist, Adam Smith, observed that firms manufactured pins in one of two different ways. He found that the performance of the factories in which workers specialized in only one or a few tasks was much greater than the performance of the factory in which each worker performed all 18 pin-making tasks.

Frederick Taylor performed a systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

The study of how to create an organizational structure and control system that leads to high efficiency and effectiveness.

Principles of bureaucracy (Weber): Formal system of organisation and administration designed to ensure efficiency and effectiveness

• Principle 1: Formal authority derives from one's position inside the organization
• Principle 2: Individuals occupy positions because of their performance
• Principle 3: Each individual's authority and responsibilities are specified by the organization
• Principle 4: Authority is exercised effectively when positions are arranged hierarchically
• Principle 5: Rules of the organization are followed and control individual behavior

Job specialization and the division of labor should increase efficiency, especially if managers take steps to lesson workers’ boredom.

Managers have the right to give orders and the power to exhort subordinates for obedience.

An employee should receive orders from only one superior.

The length of the chain of command that extends from the top to the bottom of an organization should be limited.

Authority should not be concentrated at the top of the chain of command.

The organization should have a single plan of action to guide managers and workers.

All organizational members are entitled to be treated with justice and respect.

The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities.

Managers should allow employees to be innovative and creative.

Managers need to create a workforce that strives to achieve organizational goals.

The system that managers use to reward employees should be equitable for both employees and the organization.

Long-term employees develop skills that can improve organizational efficiency.

Employees should understand how their performance affects the performance of the whole organization.

Managers should encourage the development of shared feelings of comradeship, enthusiasm, or devotion to a common cause.

Theories up to this point have overlooked something important...

The study of how managers should personally behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals

Mary Parker Follett was concerned that Frederick Taylor ignored the human side of the organization. Workers know the most about their jobs so should be allowed to participate in the work development process. Empowerment. Importance of cross-departmental communication and teams.

Hawthorne effect: Workers’ performance affected by their attitudes about their managers:

• Human relations movement: A management approach that advocates the idea that supervisors should receive behavioral training to manage subordinates in ways that elicit their cooperation and increase their productivity
• Behavior of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task
• Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance

Contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services.

Selected approaches:

• Quantitative management
  Utilizes mathematical techniques, like linear programming, modeling, simulation, and chaos theory

• Operations management
  Gives managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency

• Total quality management
  Focuses on analyzing an organization’s input, conversion, and output activities to increase product quality

• Management information systems
  Give managers information about events occurring inside the organization as well as in its external environment - information that is vital for effective decision making

The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources.

• Raw materials
• Money and capital
• Human resources

The organization obtains inputs from its environment.

• Machinery
• Computers
• Human skill

The organization transforms inputs and adds value to them.

• Goods
• Services

The organization releases outputs to its environment.

Sales of outputs allow organizations to obtain new supplies of inputs.

Characteristics of the environment determine the design of an organization's structure and control systems:

• Organizations in stable environments choose a mechanistic structure: centralized authority, vertical communication flows, control through strict rules and procedures
   
• Organizations in changing environments choose an organic structure: decentralized authority, horizontal communication flows, cross-departmental cooperation